U.S. Economy: Consumer Spending Increases as Incomes Stagnate

Yet another interesting article regarding the economy and its ability to bounce back. As I have blogged before, depending on who you talk to, the U.S. is either going broke, or we are slowly recovering. Naturally the U.S. economy will never be what it was where everyone had three cars, two houses, and of course…credit/debt. We should all recognize that everything most of us had about fifteen months ago was simply a house of cards built on credit and a mountain of debt. Nowadays, the economy is slowly growing to where it should have been minus greed. But of course, everyone wants everything now, now now! Sorry, it’s not going to happen but there is a light at the end of the tunnel for those who truly understand what has occured in the economy and what will continue to occur in the economy…slow, slow, growth. But according to this article, people are spending and they are spending wisely.

Read this article.

March 29, 2010, 11:27 AM EDT
By Timothy R. Homan

March 29 (Bloomberg) — Consumer spending in the U.S. rose in February for a fifth consecutive month, a rebound that will require gains in employment to be sustained.

Best Buy Co. and Nike Inc., which have reported higher- than-anticipated profits, are among companies that may keep benefitting as the emerging recovery gives Americans the confidence to buy. The pickup in purchases has caused the household savings rate to drop to the lowest level in more than a year, underscoring the need for more jobs to ensure the recovery is maintained.

“Considering the circumstances, this is a fine performance with the job market still not strong,” said Michael Moran, chief economist at Daiwa Securities America Inc. in New York. “As the labor market comes back, we should see continued support from consumers.”

Stocks and commodities rose on signs the world’s largest economy will keep growing and as concern waned over the Greek government’s deficit. The Standard & Poor’s 500 Index advanced 0.6 percent to 1,173.35 at 11:22 a.m. in New York.